SECRETARY CLINTON: Thank you. Well, this is a bittersweet moment for me personally to deliver this first inaugural lecture. I want to thank Kurt for that introduction and for reminding everyone that you are a tough act to follow, my friend. (Laughter.) Along with Deputy Secretary Jim Steinberg, Kurt and his terrific team here at the State Department have brought intellectual heft and vision to our diplomacy in Asia. And wherever I go in the region, people always have a Kurt Campbell story to tell, and some of them are even flattering. (Laughter.) So thanks to my great team here at the State Department – Jim, Kurt, and everyone – for all of your hard work and leadership. And it is a special honor to welcome my colleague, Foreign Minister Bildt, along with so many distinguished ambassadors, including Ambassador Zhang, to this inaugural Richard Holbrooke lecture here at the State Department in the Ben Franklin Room.

For nearly half a century, as a young Foreign Service officer in Vietnam, as the tireless negotiator of the Dayton Accords, as the Special Representative for Afghanistan and Pakistan, Richard Holbrooke grappled with some of the most difficult and important challenges of American foreign policy. And he left an indelible mark on this Department, on our country, and on the world. Because of his efforts, America is more secure, millions of people around the world have had the opportunity to live up to their full God-given potential. And we are honoring Richard’s legacy in many ways, and this afternoon, many of us will gather at the Kennedy Center to share stories and remembrances. And one of the ways we have chosen is this new lecture series, which reflects Richard’s passion for serious policy questions and his conviction that they deserve serious discussion.

Richard had a hand in nearly every crucial foreign policy challenge of the last 50 years. If he was not invited to have a hand, his hand was there anyway. (Laughter.) And I look around this room not only at Americans, but at many of our friends from across the world, and many of you know what I’m talking about. He was tireless, he was relentless, he would not take no for an answer, because I would give him no over and over again, and it was not the answer he wanted. He worked with many of us on these important issues. And today, I would like to focus on one that he knew well and that is on everyone’s mind as we prepare for the important arrival of President Hu Jintao: the future of U.S.-China relations.

As the State Department’s youngest-ever Assistant Secretary of East Asian and Pacific Affairs, Richard was, as Kurt has said, a key player in the brokering of the opening of formal diplomatic relations with China in 1979. Later, he served for many years as the president of the Asia Society. Throughout his career, Richard understood that a strong U.S.-China relationship would bolster stability and security in the Asia-Pacific region, and he was also clear-eyed about the many obstacles to our cooperation. Most of all, though, he saw that the success of the relationship depends on its ability to deliver positive results to the people of both our nations, first and foremost, but also to the rest of the world.

These insights remain just as relevant today. And we heard them underscored this week by Secretary Gates in Beijing and by Secretaries Geithner and Locke here in Washington. Three decades after our nations first opened the door to engagement, our relationship is marked by great promise and real achievements, but also by significant challenges as one would expect. And more than ever, we will be judged on the outcomes that we do produce for greater peace, prosperity, and progress in our own countries and throughout the world.

America and China have arrived at a critical juncture, a time when the choices we make – both big and small – will shape the trajectory of this relationship. And over the past two years, in the Obama Administration, we have created the opportunity for deeper, broader, and more sustained cooperation. We have seen some early successes and also some frustrations. And moving forward, it is up to both of us to more consistently translate positive words into effective cooperation. It is up to both of us to deal with our differences, and there will be always differences between two great nations. We need to deal with them wisely and responsibly. And it is up to both of us to meet our respective global responsibilities and obligations. These are the things that will determine whether our relationship delivers on its potential in the years to come.

Now, we have already come a very long way since the first tentative steps of the diplomatic opening in 1979. After many years of virtually no contact, we have had three decades of intense engagement. In the beginning, our relationship was almost exclusively focused on the common threat posed by the former Soviet Union. And during the 1990s, we began to engage on broader regional issues. And I remember with great fondness the trip that my husband and I and our daughter took to China as part of that intense engagement. Today, our relationship has gone global. We debate and discuss nearly every major international issue in both bilateral dialogues and multilateral meetings. And these are on issues that we have concerns together on, and these are on issues on which we have fundamental disagreements such as human rights. The breadth of our engagement will be on full display next week when President Obama welcomes President Hu to the White House.

These three decades of relations between our countries have also been three decades of impressive growth for China. When Richard Holbrooke and his colleagues first visited China, its GDP barely topped $100 billion. Today, it is almost $5 trillion. Trade between our two countries used to be measured in the hundreds of millions of dollars. Today, it surpasses $400 billion annually.

China’s transformation, made possible primarily by the hard work of its people and the vision of its leaders, was also aided by an open and dynamic global economy and by the American power that has long secured stability in the region. It has lifted hundreds of millions out of grinding poverty and now helps drive global prosperity. The United States has welcomed this growth, and we have benefited from it. Today, our economies are entwined and so are our futures.

But despite its progress in the past 30 years, China still faces great challenges. When I speak with my Chinese counterparts, they often talk to me in passionate terms about how far their country still has to go. Because even with all that growth, China’s GDP is only a third of the size of America’s with nearly four times the number of people. And our trade with the European Union is still greater than our trade with China. As Secretary Geithner noted this week, China has a lot of work to do to move from a state-dominated economy, dependent on external demand and technology, to a more market-oriented economy powered by domestic demand and innovation. More of its people are also seeking greater respect for their cultural and religious beliefs. They’re seeking more opportunity for improved working conditions and for legal recourse for injustices.

Understanding these strengths and challenges is essential for us and others to understand today’s China, and it provides important context to the country’s changing role on the world stage and to the future of the U.S.-China relationship.

History teaches that the rise of new powers often ushers in periods of conflict and uncertainty. Indeed, on both sides of the Pacific, we do see some trepidation about the rise of China and about the future of the U.S.-China relationship. Some in the region and some here at home see China’s growth as a threat that will lead either to Cold War-style conflict or American decline. And some in China worry that the United States is bent on containing China’s rise and constraining China’s growth, a view that is stoking a new streak of assertive Chinese nationalism. We reject those views.

In the 21st century, it does not make sense to apply zero-sum 19th century theories of how major powers interact. We are moving through uncharted territory. We need new ways of understanding the shifting dynamics of the international landscape, a landscape marked by emerging centers of influence, but also by non-traditional, even non-state actors, and the unprecedented challenges and opportunities created by globalization. This is a fact that we believe is especially applicable to the U.S-China relationship. Our engagement – indeed, I would say our entanglement – can only be understood in the context of this new and more complicated landscape.

I said when I first went to China as Secretary of State early in my tenure that there was an old Chinese saying that when you’re in the same boat you have to row in the same direction. We are in the same boat, and we will either row in the same direction or we will, unfortunately, cause turmoil and whirlpools that will impact not just our two countries, but many people far beyond either of our borders.

This is not a relationship that fits neatly into the black and white categories like friend or rival. We are two complex nations with very different histories, with profoundly different political systems and outlooks. But there is a lot about our people that reminds us of each other: an energy, an entrepreneurial dynamism, a commitment to a better future for one’s children and grandchildren. We are both deeply invested in the current order and we both have much more to gain from cooperation than from conflict.

Now, that doesn’t mean that we will not be competitors. That’s the nature of human endeavors. It is who we are as people, but there are ways of doing it that are more likely to benefit than not. A peaceful and prosperous Asia-Pacific region is in the interests of both China and the United States. A thriving America is good for China, and a thriving China is good for America. Our friends and allies across the Asia-Pacific region would agree. They also want to move beyond outdated, zero-sum formulas that might force them to choose between relations with Beijing and relations with Washington.

So all of this calls for careful, steady, dynamic stewardship of this critical relationship, an approach to China on our part that is grounded in reality, focused on results, and true to our principles and interests. And that is how we intend to pursue a positive, cooperative, and comprehensive relationship with China. Now, I am sure you will hear that phrase quite a bit over the next week: positive, cooperative, and comprehensive relationship, because that really does capture our hopes for the future, and that is how our two presidents have described this relationship.

But you cannot build a relationship on aspirations alone. That is what makes this a critical juncture. As I said at the outset, the choices both sides make in the months and years ahead and the policies we pursue will help determine whether our relationship lives up to its promise, and it is up to both of us to translate high-level pledges of summits and state visits into action, real action on real issues. To keep our relationship on a positive trajectory, we also have to be honest about our differences. We will address them firmly and decisively as we pursue the urgent work we have to do together. And we have to avoid unrealistic expectations that can be disappointed. This requires steady effort over time to expand the areas where we cooperate and to narrow the areas where we diverge, while holding firm to our respective values.

As we build on our record of the past two years and shape the future of our relationship, the Obama Administration is pursuing a strategy with three elements that all reinforce one another. We are practicing robust regional engagement in the Asia-Pacific, we are working to build trust between China and the United States, and we are committed to expanding economic, political, and security cooperation wherever possible.

Let me start with regional engagement. The United States, by the blessing of our geography, is both an Atlantic and a Pacific power, and we are committed to our relationships through both of these great oceans. We are firmly embedding our relationship with China within a broader regional framework because it is inseparable from the Asia-Pacific’s web of security alliances, economic networks, and social connections.

In doing so, we will maintain an appropriate perspective on this relationship. Today, it is as important as any bilateral relationship in the world, but there is no such thing as a G-2. Both of our countries reject that concept. There are other key actors, allies, institutions, and emerging powers who will also work with us to shape regional and global affairs.

Over the past two years, the United States has reaffirmed our commitment to be an active participant and leader in the Asia-Pacific. As I said in Hawaii this fall, we are practicing what we call forward-deployed diplomacy, expanding our presence in terms of people, programs, and high-level engagement in every corner and every capital across the region. America has renewed and strengthened our bonds with our allies – Japan, South Korea, Thailand, Australia, and the Philippines – and we have deepened our partnerships with India, and Indonesia, Vietnam, Malaysia, Singapore, and New Zealand.

We are taking steps to ensure that our defense posture reflects the complex and evolving strategic environment in the region and we are working to ratify a free trade agreement with South Korea and pursuing a regional agreement through the Trans-Pacific Partnership to help create new opportunities for American companies and support new jobs here at home. Those goals will be front and center when we host the Asia-Pacific Economic Cooperation Forum in Hawaii later this year.

We’ve also worked to strengthen regional architecture in the Asia Pacific, including signing the ASEAN Treaty of Amity and Cooperation and attending the East Asia Summit for the first time and increasing engagement in the Pacific Island Forum. A more robust and coherent regional architecture in Asia benefits all of us, especially the United States and China. It helps ensure that every nation and point of view is heard. And it reinforces the system of rules and responsibilities, from protecting intellectual property to ensuring freedom of navigation, that form the basis of a just international order. In these multilateral settings, responsible behavior is rewarded with legitimacy and respect, and we can work together to hold accountable those who take counterproductive actions to peace, stability, and prosperity.

Our regional engagement places this relationship in the appropriate context. The second element of our strategy is to focus on building bilateral trust with China. We need to form habits of cooperation and respect that help us work together more effectively and weather disagreements when they do arise. The most notable example of our efforts is the Strategic and Economic Dialogue, which brings together hundreds of experts from dozens of agencies across both of our governments, not only to discuss an unprecedented range of subjects, but to inculcate that ethic or habit of cooperation across our two governments. Secretary Geithner and I are looking forward to hosting our counterparts this spring for the third round of the S&ED.

This is a good start, but I would be the first to admit that distrust lingers on both sides. The United States and the international community have watched China’s efforts to modernize and expand its military, and we have sought clarity as to its intentions. As Secretary Gates stressed in Beijing this week, both sides would benefit from sustained and substantive military-to-military engagement that increases transparency. We need more high-level visits, more joint exercises, more exchanges from our professional military organizations, and other steps to build that trust, understanding of intentions, and familiarity. This will require China to overcome its reluctance at times to join us in building a stable and transparent military-to-military relationship. But we think it is so much in both of our interests, and we will continue to raise it and work on it with our Chinese friends.

But building trust is not just a project just for our governments. Our peoples must continue to forge new and deeper bonds as well. In classrooms and laboratories, on sports fields and trading floors, our people make the everyday connections that build lasting trust and understanding. That is why we have launched a new bilateral dialogue on people-to-people exchanges and new initiatives such as the 100,000 Strong program that is sending more Chinese – more American students to China. Those students are on the front lines of charting the future of our relationship. And I saw this for myself firsthand at the Shanghai Expo, where we were delighted to have 7 million Chinese visitors come to our expo, and they were all greeted by American students speaking Chinese. And it came as quite a surprise to some of our Chinese visitors that we had so many American students who had studied Chinese and were excited about being part of such a tremendous international effort as the expo.

The third element of our strategy is expanding our work together, along with the rest of the international community, to address these shared challenges. Global recession, nuclear proliferation, terrorism, piracy on the high seas – these are threats that affect all of us, including China. And China is joining us in confronting them. So we continue to encourage China to help us do even more together, to work more actively with us to solve these problems. We have a wide-ranging agenda, a number of areas where we will ultimately be able to judge whether our relationship is producing real benefits.

On the economic front, as Secretary Geithner discussed earlier this week, the United States and China do need to work together to orient our economies to assure strong, sustained, balanced future global growth. In the aftermath of the global financial crisis, the United States and China worked effectively through the G-20 to help spur recovery. Can you imagine where we would be economically if either China or the United States had failed to work together so constructively? It almost is a frightening prospect to imagine.

We must build on that cooperation, and in his speech, Secretary Geithner noted that Chinese firms want to be able to buy more high-tech products from the United States, make more investments here, be accorded the same terms of access that market economies enjoy. Now, at the same time, U.S. firms want to ensure that the $50 billion of American capital invested in China creates a strong foundation for new market and investment opportunities that will support global competitiveness.

We can work together on these objectives, but China still needs to take important steps toward reform. And in particular, we look to China to end unfair discrimination against U.S. and other foreign companies or against their innovative technologies; to remove preferences for domestic firms, and measure that – and any measures that disadvantage foreign intellectual property. We need to open up more opportunities for American manufactured goods, farm and ranch products, and services, as well as allowing currency to appreciate more rapidly. These reforms, we believe, would not only benefit both our countries, but contribute to global economic balance, predictability, and broader prosperity.

And we also need to work on some of the global strategic issues that confront us. Take climate change, for example. China and the United States are the world’s two largest emitters of greenhouse gases. Our cooperation at the UN Climate Conference in Mexico was critical to the conclusion of the Cancun Agreements. Now, we must build on that progress by implementing the agreements on transparency, funding, and clean energy technology. There is no time to delay. And the United States and China, working with other partners including the EU, Japan, and India, will set the pace and direction for the world to move rapidly toward a clean energy future.

On international development, we could make a significant impact by aligning our investments and coordinating projects. We would ask that China embrace internationally recognized standards and policies that ensure transparency and sustainability. I often, in my discussions with China’s leaders, hear them say that their country speaks for the developing world because of their extraordinary progress. But their development practices in Africa and elsewhere have raised serious concerns. And we welcome the commitment to development, but we would like to work more closely together to have common standards and approaches.

On security issues, there is also room to work more closely and constructively.

On Iran, for example, we’ve made progress, but now we have to follow through. As a permanent member of the United Nations Security Council, China helped enact tough sanctions, and now we are working together to implement them. And we look to China to help the international community send a clear message to Iran’s leaders to cease its illicit nuclear activity.

And let me go onto a problem that has vexed us over the last two years and particularly in the last several months, namely North Korea. The United States and China both understand the urgent need to maintain peace and stability on the Korean peninsula and to achieve the complete denuclearization of North Korea.

For our part, America will continue to stand with our allies, South Korea and Japan, as they contend with their belligerent neighbor. And, as Secretary Gates said this week, North Korea’s nuclear and ballistic missile programs are becoming a direct threat to the United States itself. So this is not just about peace and stability in Northeast Asia, nor standing with our allies; this is becoming, unfortunately, more of a national security challenge to our own shores.

From the early months of our Administration, the United States and China, along with our partners, South Korea, Japan, and Russia, joined together to condemn North Korea’s provocative missile and nuclear tests. And with China’s support, last year we adopted enhanced sanctions in the Security Council. These efforts showed clearly that when China plays a very constructive part, we can produce results together that send an unequivocal message to North Korea.

And we have emphasized to our colleagues in Beijing that China, as a country with unique ties with North Korea and chair of the Six-Party Talks, has a special role to play in helping to shape North Korea’s behavior. We fear and have discussed this in depth with our Chinese friends, that failure to respond clearly to the sinking of a South Korean military vessel might embolden North Korea to continue on a dangerous course. The attack on Yeongpeong Island that took the lives of civilians soon followed. That shelling brought into even sharper relief the acute threat posed by this kind of reckless behavior.

As the result of intense engagement in recent weeks, including a conversation between President Obama and President Hu, we have begun to work together to restrain North Korea’s provocative actions. We are building momentum in support of North-South dialogue that respects the legitimate concerns of our South Korean ally and that can set the stage for meaningful talks on implementing North Korea’s 2005 commitment to irreversibly end its nuclear program. It is vital that we work together with China. We need to make it clear to North Korea that its recent provocations – including the announced uranium enrichment program – are unacceptable and in violation of not only Security Council resolutions, but North Korea’s own commitments in the 2005 joint statement. Until North Korea demonstrates in concrete ways its intention to keep its commitments, China, along with the international community, must vigorously enforce the sanctions adopted by the Security Council last year.

On Taiwan, we are encouraged by the greater dialogue and economic cooperation between the Mainland and Taiwan – as witnessed by the historic completion of the cross-Strait Economic Cooperation Framework Agreement. Our approach continues to be guided by our One China policy based on the three joint communiqués and the Taiwan Relations Act. In the period ahead, we seek to encourage and see more dialogue and exchanges between the two sides, as well as reduced military tensions and deployments.

Finally, and crucially, on the issue of human rights, a matter that remains at the heart of American diplomacy.

America will continue to speak out and to press China when it censors bloggers and imprisons activists; when religious believers, particularly those in unregistered groups, are denied full freedom of worship; when lawyers and legal advocates are sent to prison simply for representing clients who challenge the government’s positions; and when some, like Chen Guangcheng, are persecuted even after they are released.

Now, I know that many in China, not just in the government, but in the population at large resent or reject our advocacy of human rights as an intrusion on sovereignty. But as a founding member of the United Nations, China has committed to respecting the rights of all its citizens. These are universal rights recognized by the international community.

So in our discussions with Chinese officials, we reiterate our call for the release of Liu Xiaobo and the many other political prisoners in China, including those under house arrest and those enduring enforced disappearances, such as Gao Zhisheng. We urge China to protect the rights of minorities in Tibet and Xinjiang; the rights of all people to express themselves and worship freely; and the rights of civil society and religious organizations to advocate their positions within a framework of the rule of law. And we believe strongly that those who advocate peacefully for reform within the constitution, such as the Charter 08 signatories, should not be harassed or prosecuted.

We believe also that when China lives up to these obligations of respecting and protecting universal human rights, it will not only benefit more than one billion people. It will also benefit the long-term peace, stability, and prosperity of China. For example, an independent, impartial judicial system and respect for the rule of law would protect citizens’ property and guarantee that inventors can profit from their ideas. Freedom of expression for everyone, from political activists to academics and journalists and bloggers, would help foster the open exchange of ideas that is essential to innovation and a creative economy. A vibrant civil society would help address some of China’s most pressing issues, from food safety to pollution to education to health care. This promise is already apparent in the work of individuals and NGOs who volunteered after the Sichuan earthquake. The longer China represses freedoms, the longer it will miss out on these opportunities and the longer that Nobel Prize winners, empty chairs in Oslo will remain a symbol of a great nation’s unrealized potential and unfulfilled promise.

I know that China’s leaders believe that political reforms could shake the stability of their country and get in the way of its continuing essential economic growth. But we have seen nation after nation, from South Korea to Indonesia to many parts of the world, where once they realize that denying people the right to express their discontent can easily create more unrest, while embracing reforms can strengthen societies and unleash new potential for development. It is clear that we cannot paper over differences; nor should we try to do so. But the future of our relationship can be strong if we each meet our responsibilities as great nations.

The world is looking to China, and there’s a lot of excitement about this, because we think that there are ways that China can be a unique leader in the 21st century. Embracing the obligations that come with being a 21st century power will help to realize a future that will give the Chinese people even more, in fact, unimagined opportunities. But that means accepting a share of the burden of solving common problems, abiding by and helping to shape a rules-based international order.

The United States first emerged as a true world power nearly a century ago. And there were times when, frankly, we resisted taking on new obligations beyond our borders. There’s a strong internal position that goes back in our history where we just want to tend to ourselves and let everybody else worry about the future. But whenever Americans turned inward, attempting to avoid accepting that responsibility, events intervened and we were summoned back to reality. Our leadership in the world and our commitment to tackle its greatest challenges have not drained our strength or sapped our resolve. Quite the opposite. They have made us who we are today: A force for peace, prosperity, and progress across the globe.

This is a critical juncture, yes, but I would say to my fellow Americans, this is not a time to fear for the future. The world has never been in greater need of the qualities that distinguish us – our openness and innovation, our determination, our devotion to universal values. The world looks to the United States for leadership to manage the changing times, and to ensure that this juncture leads to greater stability, peace, progress and prosperity. That is what we have always done. It is what we will always do. That is what America is all about. And we have a tradition of moving beyond past problems and conflicts. It is sometimes hard to imagine that in the lifetime of my mother the United States was involved in two world wars, a terrible depression where we sent many of our best young people off to war in far off places, and yet we have forged close relationships with former adversaries.

Today, we have a positive relationship with China and the chance for a very positive future. The United States welcomes China as a rising power. We welcome China’s efforts not only to lift their own people out of poverty, but to export prosperity and opportunity. And we look to China to join us in meeting the challenges of today and tomorrow. We look forward to a time when our future generations can look back and say of us: They didn’t just talk about a positive, cooperative, and comprehensive relationship. They made the right choices. They worked together. They delivered results. And they did leave us a better world. That is our vision and that is our commitment for this most important relationship.